Hi all .
I have a question regarding interest tax deductibility, your help/advice/opinion will be highly appreciated. Apology, if a similar question had been raised before.
Illustration:
1. PPOR loan acc linked with its PPOR offset acc.
2. IP loan acc linked with IP offset acc and initially there is $40K in this IP offset acc as a result of recent revaluation & refinancing.
Both PPOR & IP are Interest only Payment.
The IP offset acc is utilized to pay all IP expenses, (mortgage interest, council, building insurance, repair, etc) and some other business expenses.
Basically, this IP offset acc is set to pay all income generating expenses until the balance = $0 (and the IP loan acc = max), during which time all the salary plus rental plus business income (minus private expenses) paid into PPOR offset acc to reduce non-deductible interest.
At the end of current financial year, (using illustrative number):
1. The IP and business expenses (mortgage interest, council, insurance, business expenses, etc) = $38K which is tax deductible and,
2. The interest = $2K. (This is the interest component in the current FY accrued from: council, building insurance, repair, business expenses, etc, excluding mortgage interest).
Questions:
1. Is this $2K interest component tax deductible in the current FY?
2. Is this $2K+compounding, tax deductible in the next FY and beyond? (After tax deduction applied on the principal expense in the current FY).
I have this ATO link explaining the deductibility of interest charged on loan for repairs/reno/depreciating asset, but not sure for other expenses like council, insurance, land tax, business expenses, etc. Are they treated the same ?
http://www.ato.gov.au/individuals/content.aspx?doc=/content/00113233.htm
Thank You.
I have a question regarding interest tax deductibility, your help/advice/opinion will be highly appreciated. Apology, if a similar question had been raised before.
Illustration:
1. PPOR loan acc linked with its PPOR offset acc.
2. IP loan acc linked with IP offset acc and initially there is $40K in this IP offset acc as a result of recent revaluation & refinancing.
Both PPOR & IP are Interest only Payment.
The IP offset acc is utilized to pay all IP expenses, (mortgage interest, council, building insurance, repair, etc) and some other business expenses.
Basically, this IP offset acc is set to pay all income generating expenses until the balance = $0 (and the IP loan acc = max), during which time all the salary plus rental plus business income (minus private expenses) paid into PPOR offset acc to reduce non-deductible interest.
At the end of current financial year, (using illustrative number):
1. The IP and business expenses (mortgage interest, council, insurance, business expenses, etc) = $38K which is tax deductible and,
2. The interest = $2K. (This is the interest component in the current FY accrued from: council, building insurance, repair, business expenses, etc, excluding mortgage interest).
Questions:
1. Is this $2K interest component tax deductible in the current FY?
2. Is this $2K+compounding, tax deductible in the next FY and beyond? (After tax deduction applied on the principal expense in the current FY).
I have this ATO link explaining the deductibility of interest charged on loan for repairs/reno/depreciating asset, but not sure for other expenses like council, insurance, land tax, business expenses, etc. Are they treated the same ?
http://www.ato.gov.au/individuals/content.aspx?doc=/content/00113233.htm
Thank You.